LONDON – Facebook made a startling admission in its earnings announcement this month: it was seeing a “decrease in daily users, specifically among teens.” In other words, teenagers are still on Facebook; they’re just not using it as much as they did. It was a landmark statement, since teens are the demographic who often point the rest of us toward the next big thing.
Their gradual exodus to messaging apps such as WhatsApp, WeChat and KakaoTalk boils down to Facebook becoming a victim of its own success. The road to gaining nearly 1.2 billion monthly active users has seen the moms, dads, aunts and uncles of the generation who pioneered Facebook join it too, spamming their walls with inspirational quotes and images of cute animals, and (shock, horror) commenting on their kids’ photos. No surprise, then, that Facebook is no longer a place for uninhibited status updates about pub antics, but an obligatory communication tool that younger people maintain because everyone else does.
All the fun stuff is happening elsewhere. On their cellphones.
When mobile messaging apps such as WhatsApp first emerged in 2009, they looked like a threat to mobile carriers. Everyone from Vodafone to Dutch operator KPN was mentioning them in sales calls. Mobile operators are estimated to have lost $23 billion in SMS revenue in 2012 due to messaging apps, which host free instant messages through a phone’s data connection, which these days is often unlimited. Now these apps are becoming a threat to established social networks, too.
WhatsApp, the most popular messaging app in the U.K. and on half the country’s iPhones, according to Mobile Marketing Magazine, has more than 350 million monthly active users globally. That makes it the biggest messaging app in the world by users, with even more active users than social media darling Twitter, which counts 218 million. About 90 percent of the population of Brazil uses messaging apps, three-quarters of Russians, and half of Britons, according to mobile consultancy Tyntec. WhatsApp alone is on more than 95 percent of all smartphones in Spain. The power users and early adopters of these apps, the ones you’re most likely to see tapping their thumbs over a tiny screen, are under 25.
Part of the reason is that gradual encroachment of the gray-haired ones on Facebook. Another is what messaging apps have to offer: private chatting with people you are friends with in real life. Instead of passively stalking people you barely know on Facebook, messaging apps promote dynamic real-time chatting with different groups of real-life friends, real life because to connect with them on these apps you will typically already have their mobile number. The trend flies in the face of recurring criticism of young people — that their social lives are largely virtual — when many more are in fact embracing the virtues of privacy and services like WhatsApp, which shun advertising.
“I only use WhatsApp to communicate and send pics these days,” said Natalie West, a 20-something financial sales associate in London. In the last few years she has used Facebook less and less because she doesn’t want “the whole world to know” what she’s doing. When people set up events and get-togethers on Facebook, West and her boyfriend tend to reply on WhatsApp instead because “it’s more personal.” For similar reasons, some 78 percent of teenagers and young people use mobile messengers to plan a meet-up with friends, according to research advisory firm mobileYouth.
Another factor is the rise of the “selfie,” often silly self-portraits taken at arm’s length with a mobile. Almost half of the photos on Instagram feeds among people between the ages of 14 to 21 in the U.K. are selfies, according to mobileYouth. Sending those photos via a mobile messaging service is safer than broadcasting them on Facebook, since they’re less likely to be seen by a boss or dozens of Facebook friends you forgot you had. Selfies are even bigger on Snapchat, the evanescent photo sharing app that deletes a photo several seconds after it has been viewed. With around 150 million active users, the service has inevitably become a favored way for teens to send sexy or even naked photos of themselves, an ill-advised practice known as “sexting.” But teens also love Snapchat because it allows them to send inane photos of themselves without fear of leaving a permanent digital footprint. The California-based app is seen as so hot, with so much potential for growth, that it has already been pegged with a $2 billion-$4 billion valuation in the Silicon Valley tech community. Estimates are even higher for WhatsApp, which makes money through an annual subscription; some observers suggest it could be worth upwards of $5 billion.
The final, big reason why young people are gravitating toward messaging apps is that many of these apps no longer do just messaging. They are social networks. The best examples come out of Asia, with messaging platforms KakaoTalk (South Korea), WeChat (China) and LINE (Japan). All have tens of millions of users, with WeChat boasting more than 200 million, and take their services beyond offering straight messaging to games, stickers and music sharing. Before you write off digital stickers as inane, they are a decent moneymaker for LINE: of the $58 million the company made in sales in the first quarter of 2013, half came from selling games and 30 percent — or roughly $17 million — from sales of its 8,000 different stickers. Some are free or, in Spain where LINE has 15 million registered users, cost around €1.99 ($2.70). Often users choose stickers instead of words when they need to express themselves, one LINE executive said; it’s known to have helped couples get over fights more easily by offering multiple stickers to say sorry.
Gaming is another moneymaker. With KakaoTalk, which is thought to be on 90 percent of all smartphones in South Korea, registered users can choose from more than 100 games they can play with one another, and games alone helped the company generate $311 million in sales in the first half of 2013. A couple of non-Asian messaging apps such as Kik (Canada) and Tango (U.S.) are turning themselves into full-fledged platforms too, inviting software engineers to create games that run on their apps. They will typically let developers take home half the revenue while taking a 20 percent cut. App stores such as Google Play and Apple’s App Store take the remaining 30 percent. Tango took all this a step further this month when it partnered with music-streaming Spotify to allow its 60 million monthly users to share music clips with one another. Two years ago Spotify launched a similar partnership with Facebook. “What we’re seeing in the messaging space is an explosion in growth,” said Spotify’s vice president of strategic partnerships, Tom Hsieh, who hinted there would be partnerships with other messaging apps in the future too. “I don’t think there’s been a clear winner [among them] yet.”
It is worth noting that, with so many of these apps getting into games, stickers and now music sharing, it is becoming harder to define them as messaging services.
“I think there is some misunderstanding here in how we categorise these apps,” says Pavel Durov, who founded Russia’s version of Facebook, VK.com, and recently launched a mobile messaging service called Telegram.
“They are social networks. You have a social graph there; a newsfeed; you have profile pages. Many things that are related to social networks by definition,” Durov says.
Social chat apps are another way to define them, says Gartner analyst Brian Blau. “People are sometimes using three or four of these apps.” Who dies, survives or thrives may ultimately depend on how well any of these players can make money. Snapchat, arguably more of a photo-sharing service than a messaging app, has yet to explain how it will do so.
WhatsApp says it is already profitable thanks to its annual subscription fees; Pinger relies on advertisements; WeChat, LINE, Kakao and Kik sell stickers and games. Some of these services are bound to go out of fashion, and a few business models will fail, and they’re still a world away from the $2.1 billion in sales that Facebook brought in this last quarter.
But there is little doubt that millions of teens will use these apps more and more, and older demographics will eventually join them. There’s a good chance that will continue to be at the expense of Facebook.